CCP welcomes decision to withdraw ICH agreement

ISLAMABAD: The Competition Commission of Pakistan (CCP) welcomed the government’s decision to withdraw the controversial International Clearing House (ICH) agreement.The ICH agreement, which came into force in September 2011 created a cartel of all 14 Long Distance and International (LDI) operators to terminate all incoming international call traffic exclusively on the network of Pakistan Telecommunication Company Limited (PTCL). The agreement suspended all interconnection capacities of all LDIs except for PTCL. LDIs also agreed to terminate all incoming international traffic at a fixed settlement rate of 8.8 US cents/minute. Under the agreement LDIs shared revenue amongst themselves as per the agreed quota allocated to each LDI. Chairman CCP Dr Joseph Wilson said the anti-competitive effects of ICH were first highlighted in August 2012, when CCP issued a policy note to Ministry of IT and Pakistan Telecommunication Authority (PTA) highlighting the serious competition concerns in the ICH agreement and recommended its withdrawal. However CCP’s recommendations were not implemented.In April 2013 CCP passed an order condemning the arrangement, as it was a blatant violation of the Competition Act, in the form of cartelisation by all LDI operators. In fact the arrangement was more egregious than a simple price fixing cartel in that all LDIs except for PTCL shut their networks and it was only PTCL, which was carrying the traffic. CCP held the ICH was anti-competitive as it fixed prices, reduced choice, foreclosed the market, removed incentive for better quality of service and incentives for investment in improvement of infrastructure and was thus a clear threat to consumer welfare and a total negation of the Telecom Deregulation Policy, 2003.